On Wednesday, July 21, Novartis (NYSE:NVS) will report its last quarter’s earnings. Here is Benzinga’s preview of the company’s release.
Net Income, Earnings, And Earnings Per Share
Earnings and especially earnings per share (EPS) are useful measures of a company’s profitability. Total earnings, which is also referred to as net income, equals total revenue minus total expenses. EPS equals to net income divided by the number of shares outstanding.
Earnings And Revenue
Sell-side analysts expect Novartis’s EPS to be near $1.52 on sales of $12.51 billion. Novartis EPS in the same period a year ago totaled $1.36. Revenue was $11.35 billion.
What Are Analyst Estimates And Earnings Surprises, And Why Do They Matter?
Wall Street analysts who study this company will publish analyst estimates of revenue and EPS. The averages of all analyst EPS and revenue estimates are called the “consensus estimates”; these consensus estimates can have a significant effect on a company’s performance during an earnings release.
When a company posts earnings or revenue above or below a consensus estimate, it has posted an “earnings surprise”, which can really move a stock depending on the difference between actual and estimated values.
The analyst consensus estimate would represent a 11.76% increase in the company’s EPS figure. Sales would be up 10.25% on a year-over-year basis. The company’s reported EPS has stacked up against analyst estimates in the past like this:
| Quarter | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 |
|---|---|---|---|---|
| EPS Estimate | 1.59 | 1.36 | 1.45 | 1.35 |
| EPS Actual | 1.52 | 1.34 | 1.52 | 1.36 |
| Revenue Estimate | 12.51 B | 12.87 B | 12.53 B | 12.00 B |
| Revenue Actual | 12.41 B | 12.77 B | 12.26 B | 11.35 B |
Stock Performance
Shares of Novartis were trading at $90.62 as of July 19. Over the last 52-week period, shares are up 4.68%. Given that these returns are generally positive, long-term shareholders should be satisfied going into this earnings release.
Do not be surprised to see the stock move on comments made during its conference call. Novartis is scheduled to hold the call at 08:00:00 ET and can be accessed here.
